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Zong Qinghou, Wahaha Chairman

If you look at the company name alone, without real knowledge, you would think twice – Wahaha, which actually means “laughing children” in Mandarin, may even sound like a joke. But children’s laughter sure has that magnetic appeal that it has brought Zong Qinghou an estimated $12.6B as of September 2012 making him China’s richest man.

See what a “name” could do? Observe most successful companies – you’ll notice the “tingle”.

Hangzhou Wahaha was started in 1987 by Zong with two retired teachers and a loan of $22,230 selling popsicles, soda, and stationary. This year it’s looking forward to a ¥10B profit from last year’s ¥7B while seeking to expand its market and diversify into the food industry and commercial real estate. Nice story, so let’s see what we could learn, validate, or improve.

NOTABLE FACTS AND DEVELOPMENTS

Spends $20 a day. With a yearly income of around ¥70M, it’s amazing to see Zong’s expenses at a minimum. Indeed, frugality is one trade secret to long-term financial stability. With what he’s been through, he certainly knows what it is to be deprived; hence, he’s better equipped not just to understand the economy but his people – their plight and dreams. As he said, “The biggest hurdle facing China’s economy now is that the government’s income is too high and the people’s income is too low”. See? The value of empathy lies in its power to inspire.

Little education but at the top. How many times have we seen lesser educated people succeed? Lost count. Nonetheless, you could add Microsoft’s Bill Gates and the late Steve Jobs of Apple, who both dropped out of college, to that list. Succeeding..? Leadership..? Formal education has little to do with them but that doesn’t mean for organizations to lower their standards, instead, it means – to open their eyes, their mind. What’s more important is passion and courage along with several other attributes that helps one contribute and ascend to the top. Still, what’s strikingly interesting here would be the traditional thinking on hiring people. It simply goes the opposite direction as to these successful Founders and Leaders. As said in my previous articles, stereotyping is so high that it gives no thought to the real ability of the candidate in connection with the real need of a company. If organizations are really forward-bound, a paradigm shift is needed.

A successful Chinese with a U.S. green card. Unfortunately, this is no different to Bernard Arnault applying for Belgian citizenship. I mean, why? Succeeding at home and even being a member of China’s legislature makes one wonder why would he want to cling to another country. Come to think of it – you should even be more patriotic. Hence, Zong’s reputation somehow got stained in his homeland. Does it matter? Of course. Not only because he succeeded in his country but consider his “evolving” market. Well, his star would continue to shine, but, he should still clear the air as to his real purpose.

Cut taxes and allow private investments. This was Zong’s suggestion to the Chinese government. Conspicuously, this applies to many governments wanting to stimulate their economy. Numerous parts of the world are struggling and clearly due to the domino effect that the Eurozone among others has brought about. Banking concerns. Borrowing issues. Disclosure problems. What happened to the so-called educated and experienced? Leadership has truly been faltering. Time to try some obvious yet lesser traveled routes.

Global deals. From trying to get hold of British snacks to Japanese yogurt maker to a shopping center in Hangzhou, Wahaha has been studying possibilities to expand its network which is good. However, the thing with global deals or any deal for that matter is that not all of it succeeds just like that. One, the more related (the company you’re eyeing) it is to your base, the easier it would be for your management people. Two, timing is crucial not just in getting a reasonable buyout price but in line with trends and market shifts as well as situations like the Eurozone crisis.

In all, business is about hard work, cooperation, and common sense that many people try to complicate just because of scopes. It is simply buy and sell. It’s all about seeking greater market share and profits. About getting a better deal. About knowing how to utilize all your resources to benefit your company and shareholders in the most cost-effective way.